Britain’s steel industry has hit out at government plans to remove tariffs on imports of a wide array of products, describing them as a “hammer blow” that risks damaging the sector long term.
A preliminary decision by the Department for International Trade to remove a large number of products from so-called import “safeguards”, designed to protect domestic producers from a flood of cheap imports, needs to be “urgently rethought”, according to UK Steel.
The lobby group said the decision was a first test for the UK as an independent trading nation post-Brexit and warned that the removal of protections would have an adverse impact on steel manufacturers in Wales and north-east England.
“The UK will become a magnet for huge volumes of steel imports, it is beyond worrying to consider the damage this could do to the UK steel sector and its long-term viability,” said Gareth Stace, director-general of UK Steel.
“This is the first test of the government’s commitment to our steel industry post-Brexit and they’re failing it,” said Alasdair McDiarmid, operations director of the steelworkers’ union Community.
The safeguards set tariff-free quotas for a range of steel products based on the level of imports between 2013 and 2017. Once the quota thresholds are passed, tariffs are applied to any additional imports over a three-month period. They have been in place since 2018 when the UK was still part of the EU and were extended as part of the Brexit transition period, which ended in December.
Under plans published on Tuesday, the Trade Remedies Investigations Directorate, an arm’s-length body of the DIT, recommended extending the measures on 10 categories of imports for three years from next month.
It also suggested that measures on nine categories be revoked. The agency said that in those categories it had found there was no domestic production, the increase in imports was not significant enough or was not likely to cause injury to domestic industry.
UK Steel said the removal of the protections will have an adverse impact on the manufacture of steel sections at Teesside, tubes in Hartlepool and wire-rod made in Cardiff, Scunthorpe and Rotherham. It added that the measures were designed to protect the “viability of an entire industry, not individual production lines”.
The industry employs more than 33,000 people directly in the UK and supports a further 42,000 in supply chains.
Britain’s biggest steel companies include Tata Steel, based at the Port Talbot works in south Wales; British Steel, owned by China’s Jingye Group, which runs the giant site at Scunthorpe; and Liberty Steel, owned by GFG Alliance.
British Steel said it was “extremely disappointed”, warning that if the plans are accepted it would be a “major setback for UK manufacturers who are committed to helping rebuild” Britain’s economy.
UK Steel said the inclusion of more complete trade data shows there has been an increase in imports across the board.
Sir Andrew Cook, chair of family-owned Sheffield steel fabricator William Cook, said dropping tariffs would damage the UK industry, and Chinese producers were already dumping inferior quality steel in the UK below its cost price.
“Only recently I was offered 1m tonnes of brand new Chinese-made steel rails at the knockdown price of $150 per tonne. This is one half of their scrap value. How can any western steel company compete with this ‘sell at any price’ behaviour?” Cook said.
The company makes rails, caterpillar tracks and machinery components. Cook said China sought to create monopolies by undercutting western manufacturers.
“Sooner or later, monopoly established, China will hike the price.”
The DIT said: “We have a robust trade remedies framework via the TRID to protect UK producers from unfair trading practices and unforeseen surges in imports. This government supports free trade for British steel manufacturers.
“The secretary of state has limited powers in relation to the TRA, and only has the choice under law to accept the TRA’s recommendation, or see safeguard measures expire at their end date.”
Industry stakeholders have seven days to appeal. The final decision will be made by Liz Truss, international trade secretary.